AMSTERDAM, Netherlands (AP):

Royal Dutch Shell PLC offered C$7.7 billion (US$6.8 billion) Monday to buy the 22 per cent it doesn't own of its Shell Canada Limited subsidiary, aiming to simplify its corporate structure and increase ownership of Canadian oil sands.

Shell said it offered C$40 (US$35.55) per share for Shell Canada, a 22 per cent premium on the company's closing share price of C$32.80 on the Toronto stock exchange Friday.

John Hofmeister, president of Shell's U.S. arm, said in an interview that putting the Canadian operations under complete control of the parent company would simplify decision-making and ensure a uniform approach to developing the region's unconventional resources: sands that are rich in oil, bitumen-tar or other thick petrochemicals.

"We want to make sure that the strategies that Shell is deploying are coherent," he said. "What we don't want to see happen is a conflict with ourselves."

Independent advisers

The company's offer is conditional on support of the subsidiary's board, and on more than half of the outstanding shares being tendered, the company said.

Shell Canada said in a statement it has appointed independent legal and financial advisers to appraise the bid and make a recommendation to the company's board to accept or reject it.

"In the meantime, it will be business as usual for Shell Canada with respect to our operations and progress with our projects," Chief Executive Clive Mather said in the statement.

In July, Shell Canada announced plans to increase production at the Athabasca Tar Sands project in Alberta - in which it has a 60 per cent stake - to 550,000 barrels per day from 150,000 bpb.

Shell Canada as a whole produced around 230,000 barrels per day in 2005.

Oil-containing sands are more expensive to develop than traditional oil fields, but costs are falling as extraction technology improves. Canada's relative political stability in comparison with many oil-producing regions of the world gives assets there a premium.

The Shell Canada offer "would appear to be a good deal for the group," brokerage Kepler, Teather & Greenwood Merrion said in an analyst note. If it succeeds, Shell will "be able to fully benefit from the ramp-up in the production from the Athabasca Tar Sands, where it has been making a considerable investment," it said.

Shell combined its Dutch and British arms in 2005 to simplify its corporate structure after an accounting scandal in which it was forced to repeatedly cut its estimated proven oil reserves.